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GDP, Inflation and Interest Rates Expected to Go Up in Brazil Next Year

Inflation in Brazil According to a Brazil's Central Bank poll among financial experts, which is published weekly in the Focus Bulletin, the Brazilian economy is expected to expand 0.21% in 2009  In the previous edition the growth estimate was 0.20%.

However for 2010 the expansion rate forecast remains at 5% as has been for the last three weeks.

The experts' poll shows that inflation and interest rates for 2009 and 2010 will be higher than originally estimated.

Inflation (better identified as the broad consumer price index or IPCA) is estimated to reach 4.26% this year up from the 4.25% of last week, and 4.48% in 2010, compared to the 4.25% of a week ago.

The basic interest rate or Selic is forecasted to end 2009 at 8.75%, (a record low), but by the end of next year should be at 10.6%, up from 10.5%.

Meantime Finance Minister Guido Mantega said that there are not going to be any new surprise regarding foreign exchange policies for the rest of the year.

Foreign investors have seen two new taxes added to capital markets this year mainly the 2% tax on foreign inflows into stocks and bonds and a new 1.5% tax on investors who are selling Brazilian stocks in order to buy the same US depositary receipts listed on the New York Stock Exchange.

The massive inflow of funds to Brazil has made the local currency, Real soar 30% against the US dollar so far this year, boosting imports but making Brazilian exports less competitive in foreign markets.

Mercopress

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